952 LIFO Adjustment

Additions/Deductions

Deductions from Income

Synopsis

For dealerships using the “Last In First Out” method of cost accounting, Account 952 is established to record the amount of adjustment allowed by law under the LIFO regulations.

Debits

Credits

  1. LIFO inventory adjustments

  1. LIFO inventory adjustments

 

Example 1

Record the LIFO adjustment of $90,000 for new vehicles at year-end of which $55,000 is for new cars and $35,000 is for new trucks.

Journal: General Journal

Entry:

 

Debit

Credit

Account 952

LIFO Adjustment

$90,000

 

Account 231L

Inventory – New Cars – LIFO Reserve

 

$55,000

Account 237L

Inventory – New Trucks – LIFO Reserve

 

$35,000

Note:

Professional tax and accounting advice should be obtained regarding the proper method of setting up and reporting LIFO reserves and adjustments. 

 

Transactions, which are related, should be recorded in separate sub-accounts.  Sub-accounts serve to keep records organized for future analysis and auditing.  The sub-accounts in these examples are designated by a letter following the account number (suffix).  Please refer to your DSP's instructions for establishing sub-accounts.